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Don’t count on battered Sembcorp Marine being privatised: analysts

The prolonged distress in the marine business has left Sembcorp’s marine arm gasping for air, but if analysts are to be believed, there is no reason to believe it would be privatised soon.

According to an analyst report from UOB Kay Hian, Sembcorp’s management said whatever decision it makes has to be accretive to shareholders.

Additionally, UOB Kay Hian said Sembcorp said it already has a 61% stake in Sembcorp Marine, and should reserve its money to grow other businesses that give a higher yield.

“This is in view of an expected prolonged downturn in the marine business,” UOB Kay Hian said.

“SMM had earlier announced a 4Q15 net loss of S$537m due to a loss provision of S$609m for Sete Brasil drillship contracts and other rig contracts, as well as a S$150m loss from associate COSCO Shipyard Group (CSG). The provision was mostly for supply-chain costs, as well as doubtful debts pertaining to some of its riskier rig contracts,” UOB Kay Hian added.

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